Sharing rules in teams. (Q1867557)

The article deals with the problem of output sharing in a moral hazard in a team situation. The author assures that the team uses some procedure to decide a sharing rule before actual production takes place. The main result shows that, given an outcome which is noncooperatively implementable, it can be realized by a Nash equilibrium of the game played in production conditional on a simple linear sharing rule. It is also shown that when there is limited liability, the procedure needs to consider only the slightly more complicated piecewise linear rules. As a consequence of the linear sharing rule result, the author also characterizes implementable outcomes.